Local retail prices, product variety and neighborhood change

Fernando Borraz, Felipe Carozzi, Nicolas Gonzalez Pampillon and Leandro Zipitria

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We study how local grocery markets within a city are affected by changes in housing markets. Our empirical strategy exploits a shift in the spatial distribution of construction activity induced by a large-scale, place-based tax exemption in the city of Montevideo. The introduction of new housing stock induced by the policy causes a reduction in grocery prices of 2.3 percent and an increase in locally available product varieties. Using insights from a multiproduct model of imperfect competition and estimates for different types of stores, we show these changes are the result of incumbents' response to an increase in local demand.

JEL-codes: L81 O18 R22 R23 R31 R38 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2024-02-01
New Economics Papers: this item is included in nep-geo, nep-lam and nep-ure
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Published in American Economic Journal: Economic Policy, 1, February, 2024, 16(1), pp. 1 - 33. ISSN: 1945-7731

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http://eprints.lse.ac.uk/119854/ Open access version. (application/pdf)

Related works:
Journal Article: Local Retail Prices, Product Variety, and Neighborhood Change (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:119854

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